Cities see disparate effects of federal cuts

With federal cuts set to kick in Friday, cities across Orange County are assessing the damage that will hit them if Congress doesn't reach a deal.

Some cities say they will be crippled by the cuts. Others say regardless of the decision in Washington, they'll be fine. Still more say they don't know exactly how they'll be affected.

In Garden Grove, the impact "will definitely" be felt both directly and indirectly, said Kingsley Okereke, the city's finance director.

"Directly, the city may see some cutback in our Housing Authority funding. A 10 percent reduction seems to be the number that is being thrown around," Okereke said in an email.

Other federal grants, such as Housing and Urban Development and community development block grants, may be cut back as well, he said.

"Indirectly, the cuts can put a chill on business and consumer spending, which in our case, would translate into potential loss of sales tax, hotel tax and any other revenue that is consumer-confidence driven. Overall, (it's) an unnecessary drag on a weak economy," Okereke said.

In Lake Forest, city officials say it remains unclear how the cuts could affect the city's budget.

Only federal grants potentially would be cut, and the city doesn't have many of those, according to Finance Director Keith Neves. One of those grants is the Community Development Block Grant program, which the city has used in the past for housing rehabilitation loans, fair housing advocacy and access ramp improvements.

Rancho Santa Margarita receives a small amount of federal money, mostly in the form of Community Development Block Grant funding. City Manager Jennifer Cervantez estimated the sequestration could pinch the overall CDBG funds by less than 10 percent.

The city works with local organizations to provide CDBG funds for minor home repairs for seniors and disabled people, food and financial assistance for families in need, and child care services for low- and moderate-income families, among other programs.

Mission Viejo is not expecting any cuts as a result of the sequestration, City Manager Dennis Wilberg said.

Still, city officials are checking on whether funding sources that go toward road improvement projects will be cut or reduced, Wilberg said.

San Juan Capistrano does not expect any impacts, either. Both Irvine and Santa Ana are still assessing how the cuts might affect their services.

"We are not aware of any known direct impact, but would follow closely any trickle-down effect," wrote City of Irvine spokesman Craig Reem. "Obviously, any movement in the economy nationally is a concern locally."

In Laguna Beach, City Manager John Pietig says he is concerned about what sequestration could mean for the city. While he said there are no specifics yet, he worries what it could mean for some of the community groups that rely on block grant funding. As an example, he points to an alternative sleeping location that is open to the local homeless community and receives about $50,000 a year from the city. Transportation funding is also threatened, he said.

"We're concerned about cuts from the federal government or the trickle-down effect from the state," Pietig said.

"There are very few specifics," he said. "I'm definitely concerned. It's the fear of the unknown. The state looks to the cities whenever they have needs."

Representatives with the cities of Orange and Anaheim said they don't expect those municipalities to suffer direct impacts.

"Our main concern is the possibility of it affecting the employment of our residents, or the businesses in the city that do work with the U.S. government," Paul Sitkoff, Orange's spokesman, said in an email. "As with the rest of the country, we are hoping that the issue resolves itself without negatively (impacting) the country, our state, and the people of Orange."

Said Ruth Ruiz, Anaheim's spokeswoman: "It may be too soon to tell – but at this point, we haven't seen any direct impact."

George Scarborough, city manager in San Clemente, said the impacts of sequestration are pretty much unknown. Two projects – the extension of La Pata near Talega and the sand replenishment project at the beach – could be affected.

"In short, no one really knows at this time what impact the sequestration will have on transportation or the Corps projects," Scarborough wrote in an email. "That's because Congress has not passed any FY13 (Fiscal Year 2013) spending bill and the president has not put forth his FY14 budget. Without specific budgetary proposals, we don't know how La Pata or the Beach Sand project might be affected."

"Overall, about half of the cuts are coming from defense, so that is where the single biggest impact will be, although it is expected that Congress will do something about that eventually. Most other agencies are considering a 2.5 percent across-the-board cut in funding, but no specifics are available yet on how that would occur and the agencies have discretion as to how the cuts are implemented," he wrote.